http://drinks.seriouseats.com/images/2013/09/20130929-268003-starbucks-vs-mcdonalds-pumpkin-spice-latte-pirmary.jpg

You open your eyes and see not one, but FIVE pumpkin spice lattes, all from different companies. But what is the difference in consumers’ minds and how do these companies use that to their advantage?

In her article, my classmate Catherine Chang wrote about the market for pumpkin spice lattes, and seasonal drinks in general. She found that MacDonald’s was offering a comparative product at half the price as Starbuck’s, the traditional PSL maker. Tim Hortons, Krispy Kreme and Dunkin’ Donuts have also jumped on the trend. She asks whether the trend will continue, and what consumers will choose.

My response is that there are two issue as play: Economic profit, and Point of Difference. Starbucks had a stranglehold on the PSL market, but the other firms could see that it was making economic profit and joined in. The PoD is what will make the consumer decide. Starbucks prices their product higher, to seem more exclusive, while the other four look to the bottom of the market. As their margins are getting squeezed, traditional fast-food companies are moving into the “high-quality” fast-food market (ex. Chipotle) because it has greater profit. Starbucks has strong brand-loyalty, but the PSL has been around for 10 years, so maybe its time to try something new.